Long-term care can be very costly. Those who need to plan for this expense may find themselves trying to figure out how to pay for a loved one to receive the care they need without depleting the assets the family has worked for generations to accumulate. This may leave the family wondering if it is possible to plan for long-term care expenses and protect assets from depletion.
In many situations, the answer is yes. There are many different strategies to achieve this goal. Three examples include:
- Trusts. Trusts are legal tools that involve transferring money into an account that manages the fund, referred to as the trustee. To be successful in this situation, the owner may need to forfeit control. As a result, it is incredibly important that the directions used to create the trust are carefully crafted to your needs. It is also important to set the trust up at the right time. A failure to plan wisely can result in a look back penalty. The look back penalty refers to the period of time the government will review your finances. The government can charge the owner a penalty if the owner makes substantial transfers during this time.
- Annuities. These financial tools offer another option. An annuity can be structured to pay a long-term care facility. If used wisely, this can be used to avoid a look back penalty.
- Caregiver agreement. This strategy involves setting up an agreement where a loved one or family friend provide care that is above and beyond that provided by the long-term care facility in exchange for a stipend.
The right asset protection planning strategy for long-term care needs will depend on each family’s unique situation. As a result, there is not a one-size-fits-all approach that is best. Contact an attorney experienced in this niche area of the law to review your situations, discuss your needs, and develop a plan that is most likely to help you achieve your goals.